Property

Property Price Drop First Tier Cities China

China’s property market becomes increasingly polarised in April. National home sales kept heading down this year, with total sold floor area dropped 15.7% month-on-month to 79 million square meters. Sales in first-tier cities, however, continued to climb in April, posting a 6.8% month-on-month gain to 4.5 million square meters. Among which, Guangzhou led its peers with its total transacted residential floor area going up by 13% month-on-month to 1.1 million square meters. Shanghai and Shenzhen followed with 12.5% and 11.2% gains respectively, while that in Beijing fell 5.7% over the month.

On the other hand, our estimated home prices in first-tier cities witnessed the first month-onmonth decline this year, with average home prices standing at RMB 15,655 per square meter in April, down 10% from March. Contrary to that, nationwide average home price went up by 3% month-on-month in April to RMB 6,234 per square meter. According to the latest data from the National Bureau of Statistics (NBS), average new home prices rose by 4.9% in April, and 67 tracked major cities, out of 70, saw new home prices rise in April.

In fact, compared with other second and third-tier cities, local governments in first-tier cities are under greater pressure to contain surging home prices. 35 provincial-level cities announced details of their property cooling measures in March, as were requested by the central Government. But only first-tier cities such as Beijing and Guangzhou were ordered to submit price-control targets.

As home prices keep surging in recent months, it becomes more pressing for local governments in first-tier cities to adopt a more direct approach. In Beijing, the municipal government ordered developers in the capital city to submit their proposed prices for scrutiny before going on sale. All presale applications will be submitted to the City’s Vice-Mayor Chen Gang for approval. Following that, Guangzhou also announced similar policy, saying all developers must seek approval from related departments before launching the projects on the market.